Choosing your estate’s executor is one of the most important decisions you make during the estate planning process, since this will be the person who will administer your estate when you die.  The executor becomes the actual manager of your property during probate, which is the legal process that settles your estate – but at what point will they distribute your property to those you named in your will?

During the period of estate administration, the property belongs to the executor and is managed by them, as they are responsible for gathering and safeguarding your assets.  The executor is also tasked with valuing the property of the deceased, which will normally require appraisals. They then determine if the estate is solvent, meaning there are more assets than liabilities or insolvent, meaning there is more debt than assets.  If the estate is solvent, the executor must pay the debt, funeral expenses, and taxes. Anyone who has a claim against the estate has a specific time frame to notify the estate, which varies from state to state, from the date of the publication of the estate notice in the newspaper to come forward.

It is only during that time that the executor could receive bills or claims against the estate’s assets. The decedent’s final federal and state income tax returns must be filed by the executor, as well. If there is property that avoided probate, such as life insurance, pension benefits, or joint property, the executor must also value these assets and report them to the tax authorities.  As you can see, the more organized and documented your estate is, the easier it will be for your executor.

It is only after all of these executor’s duties are completed that they then make the bequests that were documented in your will.  Since this process takes from 6-12 months, the beneficiaries should realize that they will not receive their inheritance immediately, and the bills are paid first.

Estate planning allows you to plan for the legalities of your estate, and if getting an inheritance to your children quickly is a priority, an estate planning attorney can recommend ways that allow property to avoid probate to get the inheritance in their hands and out of your executor’s.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Probate estates cost more than non-probate estates because they drive probate attorneys (i.e. estate planning attorneys) bonkers.  They’re a pain with many more legal hoops to jump through than settling an estate wherein probate is not required (such as in the case of a fully funded revocable living trust.)

First, probate rules are different for each county.  There are 24 counties in Maryland, including Baltimore City; therefore, there are 24 different sets of probate rules.  There is a lot to keep track of; and, often, the procedures can only be learned by trial and error.

Second, probate requires original signatures, which excludes faxes and emails.  Although, electronic filing sometimes avoids the original signature requirement, it is not available in all counties; and, even if it is, sometimes original documents such as the will (with original signature) must still be mailed in.

Third, some probate courts require bonds; whereas, others do not.  This means that sometimes the personal representative (i.e. executor) must pay a fee to guarantee that he or she will not steal from the estate and other times, not.  Often, the bond issue is determined by whether the personal representative lives in that state of Maryland, or not.

Fourth, all probate estates are under the jurisdiction of probate courts so the personal representative and the probate attorney must make court appearances, report to the court, and do whatever the court orders.  Like all of these factors, this costs time and money.

Fifth, probate estates are often more disorganized than non-probate estates.  For example, if a revocable living trust is fully funded, then that decedent likely got good legal advice.  There is likely a list of assets and other important papers stored with the estate planning documents.  This avoids the time consuming digging through piles of papers to figure out what the decedent owned by the personal representative and legal staff.

If you want to avoid probate and save legal and personal representative fees, consult with a qualified estate planning attorney.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Many estate planning tools are set up to allow property to avoid probate.  Why?  Probate Court can not only tie up property for months, even years, but it can rack up fees and costs as well.  Property that avoids probate is called non-probate property, and it generally falls into three different categories:

• Transfers by Title: Assets transferred by title include property owned in joint tenancy with the right of survivorship, such as a house that is jointly owned by a married couple.  It is important to know the form of ownership for property, particularly when it comes to estate planning, as property jointly owned as a tenancy-in-common has no rights of survivorship and is considered probate property.
• Transfers by Contract: Assets transferred by contract include life insurance policies, 401K and retirement plans, and any other asset that has the owner declare a beneficiary to receive it upon the owner’s death.
• Transfers by Trust: If the deceased has created a trust, the trust will generally contain provisions regarding transfer of the property at the time of death.

Title to these non-probate assets passes automatically at death without any Probate Court proceeding. While ownership transfers automatically, certain steps may be required to have the property released or retitled to the new owner. A certified copy of the death certificate is usually required and additional documentation may be necessary.

If a person has arranged for a non-probate transfer of ownership through title, contract, or trust, this certainly does not mean that a will is not needed. Not only will it still be needed to distribute probate assets, but a will is necessary to name a guardian for minor children as well as an executor to administer the estate.

An estate planning attorney can best advise you on the estate planning strategies that allow property to avoid probate, while creating an estate plan to meet your family’s needs and goals.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

A common phrase used in estate planning is the ‘rights of survivorship,’ particularly when it comes to owning real estate.  But do you know what this phrase actually means in plain English?

The ‘rights of survivorship’ is the ownership of property by two or more people in which the survivors automatically gain ownership of another’s interest upon their death. In the case of more than one survivor, the decendent’s share is divided among the survivors.

For example – Harry and Sally are married and own their home as joint tenant with the rights of survivorship.  When Harry dies, Sally automatically gains ownership of his interest in the home.

This concept is very important for estate planning, as it means that property owned with the rights of survivorship avoid probate, since the ownership passes automatically, rather than through the probate system.

An estate planning attorney can advise you of the best ownership form for your property, as it can be an important aspect of how your property will pass upon your death.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Probate, or the settlement of an estate in the courts, is triggered upon the death of a person who has a Will as his or her Estate Planning legal tool.  Probate also happens when there is no Will.

However, there are cases when Probate is not automatically triggered.  For example, when there were legal documents in place which will keep the estate out of Probate.

The most common Estate Planning documents that help people avoid Probate fall under the category of Trusts.

However, avoiding Probate by means of a Trust is not simply a matter of creating a Trust fund on your own, or by using software from a website.  In fact, this is a very risky thing to do.  Only an attorney who’s trained in Estate Planning should create a legally-binding Trust such as a Living Trust.

Even with a legal Living Trust in place, the tool may not guarantee that you avoid the courts.

This is because a Living Trust is more of a dynamic tool than most people think.  It has to be managed properly, especially in regards to the ongoing transfer of assets into the Trust.  Not complicated, but important.

Changing family situations may affect how a Living Trust works and whether it can keep you out of Probate.  Factors such as divorce (whether you, your children, even your grandchildren), re-marriages, perhaps loved ones who suddenly need special care – these changes in life may necessitate changes to your Trust.

Probate, which can vary from state to state, was actually created to protect individuals and to offer a legal structure for the settlement of estates – so it’s by mo means a bad thing.

But many people like to keep their affairs private, and Probate matters are public record.

Many Estate Planning tools, to remain binding, must be reviewed and modified from time to time as personal situations change.

An attorney trained in Estate Planning can create the tools that offer you the most protection, and he or she – importantly – can act as a counselor on an ongoing basis so that your Estate Plan will have the intended results you planned for.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Do you have your suspicions that one of your heirs might be dissatisfied with the way you’ve structured your estate plan? Are your children apt to fight over their inheritances? If you’re worried that your loved ones might be unhappy enough with your will to contest it in court, you might want to meet with an estate planning attorney and talk about whether a living trust would be a better option.

Unlike a will, a properly funded living trust allows your assets to avoid probate. And, while this does not guarantee that there will be no litigation over your estate, it helps to reduce the chances of estate litigation for a couple of reasons:

• A living trust is much more private than a will. When you die, your will has to be filed with the probate court before your property can be distributed to your heirs and beneficiaries. Probate is a public proceeding, which means that your will is available to anyone who wants to see it. Plus, when your estate is probated, a notice is published in your local newspaper announcing this fact to your creditors – and anyone else who wants to find out. All of this makes it very easy for disgruntled family members to learn the terms of your will and decide to fight it. A living trust, on the other hand, can be settled in private, and its terms only have to be disclosed under much more limited circumstances.
• A living trust is not settled in court. There’s no probate involved, so anyone who wants to contest the terms of your trust must initiate a lawsuit. This is not as easy as simply joining in a probate proceeding that’s already in progress.

Choosing a living trust over a will is just one strategy for reducing the likelihood of estate litigation. Your estate planning attorney can help you uncover all your options and choose the strategy that’s best for you.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

When your mom or dad passes away, there are a million details – large and small – that demand your attention.  One of the issues that often arises is who has a legal obligation to take care of a deceased parent’s final debts. The bottom line: unless you signed up to be a joint debt-holder, you, as your parent’s child, are not individually responsible for paying their debts. Here’s how it actually works:

When the Assets Outweigh the Debts

The assets left behind by a deceased person are known as that person’s “estate.” If the value of your parent’s estate outweighs the total of the debts they left behind, then those debts are paid using the money or other assets in the estate. Any property left over after the debts are paid is distributed in one of two ways: if your mom or dad left a valid will or trust, then the remaining assets are distributed as provided in that document. If your mom or dad did not have an estate plan, then the remaining assets are distributed as provided by state law.

When the Debts Outweigh the Assets

What happens when the estate does not contain enough assets to pay off all the debts left behind? In this situation, state law again plays a role: it provides the order of priority in which the debts are to be paid.  The assets of the estate are used to pay the debts, in order of priority, until there’s no money left. This means that the remaining creditors simply do not get paid. It also means that there’s nothing left over to distribute among the deceased person’s heirs.

Have questions about your mom or dad’s estate? A qualified estate planning attorney can help.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Serving as executor of an estate is an honor and a weighty responsibility. This being the case, most executors take the role seriously and do the job to the best of their ability. For some executors, though, the job is just too much. Whether the responsibilities of administering the estate are overwhelming or there are outside duties to attend to, on occasion an executor will simply neglect his or her duties, and allow a decedent’s estate to languish. When this happens, what can family members do?

In general, when an executor has failed to perform his or her duties, the decedent’s family can petition the court to remove the executor and appoint a new executor to serve in his or her place. Of course, having an executor removed or replaced is not an easy undertaking, and the court won’t take action simply because you don’t like the executor or it’s taking a little longer than you think it should to settle your loved one’s estate.

What does it take to have an executor removed or replaced? You’ll need to show that he or she has seriously neglected or mishandled the estate. Actions like failing or refusing to file required inventories or mismanaging estate assets such that they’ve lost value can result in court intervention. In some cases where the executor’s actions have resulted in loss of value to estate assets, the executor might not only be removed, he or she might also be held liable for the damages to the estate.

What should you do if think your loved one’s executor should be removed?

The first step is to get in contact with an experienced probate attorney. He or she can give you advice tailored to your family’s specific situation, and can help you take the necessary steps to get the probate process back on track.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

What are the first steps in settling a loved one’s estate? Whether the foundation of your loved one’s estate plan was a will or a trust, you’ll need to schedule an appointment with a probate attorney relatively soon after the death – within a few weeks, if possible. And, you’ll want to gather the following paperwork to take with you to the appointment.

• Estate Planning Documents: If there’s a will, you’ll need the original, plus any original codicils. If there’s a trust, a copy of the trust agreement plus any amendments will be sufficient.
• Deeds: For each piece of real estate your loved one owned, either individually or jointly, you’ll need a copy of the deed.
• Vehicle Titles: You’ll need the original title for any car or boat owned by your loved one.
• Banking and Investment Statements: You’ll need statements from each bank account, brokerage account, and retirement account, going back three months prior to death.
• Life Insurance Policies
• Beneficiary Designations: Your loved one may have designated beneficiaries for one or more life insurance policies, retirement or investment accounts, or bank accounts. If so, you’ll need copies of the forms confirming these designations.
• Loan Documents
• Contracts, Including Prenuptial and Postnuptial Agreements
• Bills: You’ll need copies of household utility and property tax bills; credit card bills; final medical bills; and funeral bills.
• Stock or Bond Certificates
• Tax Returns: You’ll need copies of your loved one’s federal, state, and gift tax returns for the three years prior to death.
• Original Death Certificates: You’ll need several original death certificates. Your probate attorney can tell you exactly how many to order.
• Business Documents: If your loved one was a business owner, you’ll need to locate additional documents relating to the business. Your probate attorney can assist you in identifying which documents you’ll need.

These documents are important because they provide vital information about your loved one’s estate. They help your probate attorney determine which property is subject to probate and whether or not estate or gift taxes will be due, and they help you begin the process of settling the estate.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

How do you know if someone is of sound mind when he or she makes a Will? And, if you don’t think that a loved one was of sound mind when his or her Will was made, can you challenge the Will?

The legal term for being of sound mind is “testamentary capacity”, and there are a number of elements that go into having testamentary capacity. A person can challenge a Will on the basis of lack of testamentary capacity. In order to do this, he or she has to prove that one of these elements was missing at the time the Will was signed.

Generally, a person making a will (called a Testator) has testamentary capacity if he or she understands:

1. That he or she is, in fact, making a Will;
2. The consequences of making a Will;
3. What property he or she owns, including a general understanding of the amount of property, and its value.
4. Who are the “natural objects of the Testator’s bounty”. This usually means the Testator’s next of kin.

Just because a Testator is elderly or ill, doesn’t mean he or she lacks testamentary capacity. Without strong evidence, like a doctor’s testimony that the Testator lacked capacity, it’s hard to prove in court that a Will should be invalidated on this basis.

What if you’re concerned that your loved ones will challenge your Will, claiming that you lacked testamentary capacity? There are steps you can take when making your Will to prevent this kind of challenge, such as having a doctor certify in writing that you have the mental capacity to make your Will. It’s important to let your estate planning attorney know your concerns, so that he or she can help find the right solutions for you.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.